CASINO

SJM profit rises 12% in Q1, but too-smoky smoking areas face closure

TAGs: AERL, Asia Entertainment & Resources, junkets, Macau, SJM Holdings

sjm-holdings-macau-aerlAsian casino operator SJM Holdings saw first quarter profits rise 12% to HK $1.92b (US $247m) thanks to a 13% rise in VIP gambling revenue. SJM, which operates 20 of Macau’s 35 gaming joints, saw VIP gambling revenue hit HK $15.1b in the three months ending March 31, while mass market gambling revenue rose 4.7% to HK $6.22b. Earnings rose 11% to HK $2.1b. Despite SJM not having a casino presence on Macau’s red hot Cotai Strip (although it’s in the process of building one), the casino outfit formerly run by Macau icon Stanley Ho has managed to maintain its status as numero uno among Macau’s six casino concessionaires in terms of market share.

SJM has also been singled out as the number one offender of the partial smoking ban Macau instituted on January 1. A report in April identified 28 casinos and slot parlors as failing to adhere to air quality guidelines, with SJM accounting for 16 of the offenders. Having already given the polluters 30-40 days to make adjustments, the Health Bureau is planning to retest the casinos “in due course.” Secretary for Social Affairs and Culture Cheong U warned that if the casinos fail the retest, the authorities will reduce “or eventually revoke” the smoking areas. SJM execs have pleaded for patience, noting that their facilities are among Macau’s oldest, making retrofits a more difficult process. Macau Business Daily quoted SJM exec Angela Leong On Kei expressing “no confidence” that SJM venues would pass the retest, describing the facilities as “congenitally faulty.”

Nasdaq-listed junket operator Asia Entertainment & Resources Ltd. (AERL) did not have a very smoking 2012, and 2013 is off to an equally disappointing start. While overall gaming revenue in Macau rose 13% in April, AERL’s rolling chip turnover fell 16% year-on-year to $1.47b. Making matters worse, AERL’s rolling chip win rate was 2.76%, below the normalized win range of 2.85% to 3%. For the first four months of 2013, AERL’s rolling chip turnover is off 22% from the same period in 2012, although April’s decline was less than AERL endured over the first three months.

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